Thursday, February 18, 2021

Unemployment claims - bad now, and maybe even worse before?

Any thoughts of the labor market picking up with increases in COVID vaccinations got some serious cold water thrown onto it with today’s release.
Weekly unemployment claims unexpectedly surged last week, rising above 800,000 as the labor market recovery stalled…. At 861,000, new jobless claims posted a surprise back-to-back weekly increase to reach the highest level in one month. The prior week's new claims were also upwardly revised to 848,000, from the 793,000 reported previously. The four week moving average for new claims ticked down slightly by 3,500 to 833,250, as claims steadied at an elevated level after a December and January surge. And new weekly claims remain multiples above their levels from before the pandemic, when claims were coming in at an average of just over 200,000 per week.
That big upward revision for the week of February 6 may be even more alarming than the even larger amount of claims for the week of February 13, because it means 6 straight weeks of new claims above 800,000.
The gig economy-based PUA program also had a big jump of nearly 175,000 in new claims, which is also the highest it has been at in a while, and it also has been trending.
But part of those PUA numbers seem to related to delays in the ability for many states to these claims, which was because of delays by Congress and President in Trump in extending these programs in the December stimulus package. PUA and the long-term PEUC unemployment program actually expired for a day in late December, which means that many of them had to be re-set at the state level, with applicants having to reapply.

An example of these delays and backlogs is displayed with Ohio had a massive jump of nearly 222,000 PUA claims last week, which seems to have a lot to do with this.
Feb. 6 – New PUA Applications, Payment Fix
As a result, Ohioans new to PUA will be able to apply, claim weeks and receive benefits. In addition, an estimated 155,453 PUA claimants who had balances on their accounts of up to seven weeks can again be paid, provided they have no other issues holding their claims. Eligible individuals also will receive the $300 FPUC payments.
So that big one-week increase likely accounts for multiple weeks of PUA claims for all of 2021.

Likewise, Illinois saw PUA claims more than double last week, and had a major increase in PEUC claims (over 88,000) for the last week of January. Both seem related to their unemployment agency’s computer updates around that time. So what this tells me is that the job market likely fell off even more at the start of the year than we thought, and that there is still a large amount of people losing their jobs every week. And it retierates the need to get stimulus checks out ASAP, and to have the add-on amounts extended beyond their March 14 expiration date. Also note that this is the week before crippling winter weather hit Texas and other parts of America in this week, which likely will translate into another spike in new claims, assuming the agencies can actually process them.

It may seem like things are improving on the COVID side, but that doesn't mean it's translating to improvement in the job market, at least not yet. Don't take my word for it, listen to what the head of the San Francisco Fed said this week. So we gotta act like unemployment is much higher than 6.3%,. Which means we need to stay hard at work on both crushing the virus and in stopping the COVID-influenced job losses that aren't just due to shutdowns, but also because the typical American doesn't have the confidence to resume activities at the same level that they did a year ago.

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